Bulls on a summer holiday!
Holidays are an expensive trial of strength. The only satisfaction comes from survival.
We're all going on a summer holiday. That's the song bulls seem to be forced to sing. The melody is surely missing following Friday's sudden and sharp selloff despite stable inflation and strong corporate earnings. It is yet another reminder that you should not get too carried away when the market is rising continuously. Lock in some gains regularly to avoid a big hit when things suddenly turn gloomy. Having said that, we do not want to scare the bulls though the month of May has not been too kind to them in two of the last three years. April was a very good month after a volatile first quarter thanks mainly to the renewed strength in FII inflows. What the foreign funds have in mind for May is anybody's guess. With the result season drawing to a close, and the monetary policy also out of the way there may not be many triggers to push the key indices higher. Inflation and the fluctuations in the currency markets coupled with global factors like crude oil prices, and the state of the US, Chinese and Japanese economies will continue to drive the sentiment. Fund flows to emerging markets, including India, will definitely play a major role.
This week at least we do not see much happening as we will have two trading holidays on Tuesday and Wednesday. As for today, we expect a weak opening on the back of the sharp drop in Asian markets and a rangebound trading for the rest of the day. The lower than expected US GDP data may also cast a shadow on the market as will higher oil prices. The yen is up this morning from a record low against the euro after China curbed lending to cool its economy, prompting traders to cut down on the so-called 'carry trades' funded by borrowing the Japanese currency. As is the trend on Monday, traded volume will be low thereby leading to higher intra-day gyrations. We advise investors to stay a little cautious due to the emergence of the fresh set of negative global issues. Reliance Communications and HLL results today may have a bearing on the index movements.
FIIs were net sellers to the tune of Rs3.78bn (provisional) in the cash segment on Friday while domestic institutions pumped in Rs1.76bn. In the F&O segment, they were net sellers of Rs7.03bn on the same day. On Thursday, FIIs were net buyers of Rs3.6bn taking their net investment for April to $1.37bn. For the year so far, foreign funds' net buying is close to $3bn. Mutual Funds brought in Rs178mn on Thursday.
Shares of airline companies could rise amid reports that they are likely to jack up fuel surcharge from Rs750 to Rs900. DS Kulkarni is the stock to watch out for. A financial daily says that the company is close to signing a deal with a foreign developer for investment in two of its projects. ICICI Bank will remain in the limelight following the declaration of its results over the weekend and announcement of the fresh equity issue worth up to $5bn. Some market watchers say the stock might fall amid worries about equity dilution.
US stocks rose for the fourth straight week, sending the Dow Jones Industrial Average above 13,000 for the first time, powered by better than expected earnings and a surge in M&A deals.
On Friday, the Dow closed at a record high for the third day in a row and the Nasdaq hit its highest point in six years, despite a weaker-than-expected GDP reading.
The Dow Jones was up 15.44 at 13,120.94. For the week, the Dow gained 1.2%. The tech-heavy Nasdaq Composite rose 2.75 to 2,557.21. For the week, the Nasdaq was up 1.2%. The broader S&P 500 finished flat at 1,494.07. For the week, the S&P 500 gained nearly 0.7%.
US light crude oil for June delivery rose $1.40 to settle at $66.46 a barrel on the New York Mercantile Exchange. The front-month contract was 14 cents down at $66.32 a barrel in extended hours of trading in Asia.
COMEX gold for June delivery rose $1.50 to end at $679.50 an ounce. Treasury prices were mostly flat with the yield on the 10-year note at 4.69%, little changed from late on Thursday. In currency trading, the dollar slipped to an all-time low against the euro before paring some of its losses and also fell modestly versus the yen.
European shares weakened from six-year highs on Friday as the euro hit an all-time record against the dollar after weak US GDP data. The pan-European Dow Jones Stoxx 600 index declined 0.6% to 386.10. The UK's FTSE 100 shed 0.8% at 6,418.70, the German DAX Xetra 30 lost 0.1% to 7,378.12 and the French CAC-40 slipped 0.2% to 5,930.77.
Asian stocks fell to a one-week low amid concern about economic growth in the US and China. The Morgan Stanley Capital International Asia-Pacific excluding Japan Index lost 0.2% to 429.17 as of 10:03 a.m. in Hong Kong, the lowest since April 19. The index is up 5% this month, set for its biggest monthly advance since November. Taiwan's Taiex index slid 1%, while Hong Kong's Hang Seng Index declined 0.4%. Indexes fell elsewhere, except in Australia, New Zealand and China. Japan's market is closed today for a public holiday.
In the emerging markets, the Bovespa in Brazil was up 0.3% at 49,229 while the IPC index in Mexico gained 0.1% at 29,372.93 and the RTS index in Russia climbed 1% to 1935.51.
Bulls take a breather
After holding firm through the week, the bulls decided to lock in some gains ahead of a truncated trading week. Reliance Industries and Bharti Airtel led the fall following mixed results while Cipla shares slumped after it reported a 34% drop in Q4 net profit. A weak Asian markets also contributed to the fall.
As a result, the benchmark BSE Sensex slid 320 points or 2.25% to end at 13,908.58 after being as high as 14,219.25 and as low as 13,884.53. The NSE Nifty finished 2.3% lower at 4083.50 after touching a high of 4182 and a low of 4074.30.
The BSE Small-Cap index and the Mid-Cap index were relatively better off, losing 1.1% and 0.9%, respectively.
The BSE Healthcare index bore the brunt of the selloff, plunging by nearly 4%, thanks largely to a 14.3% decline in Cipla. Other big losers in the pharma pack were Glenmark (4.5%), Sun Pharma (3.25%), GSK Pharma (3.2%) and Matrix Labs (3%).
Oil & Gas (3%), Banking and Metals (2.3% each) were the other big losers among the sectors. FMCG and Consumer Durable indices lost 1.1% each as well. The BSE IT index closed flat while Auto and Capital Goods shed 0.7% apiece.
Within the Sensex, the biggest losers were Cipla, Bharti Airtel (4.15%), SBI (4.1%), Tata Steel (4%), Reliance (3.7%), ONGC (3.2%), ICICI Bank (3.15%) and Grasim (3.1%). Satyam was the only major gainer, rising by 1.5%. Wipro and NTPC also ended marginally in the green.
Outside the Sensex, the prominent losers included Mahindra Gesco, Unitech, GHCL, Hindustan Construction, India Cements, Sterlite, Century Textiles, FT, Suzlon, Dabur and Reliance Capital.
MICO was a big gainer. The stock surged by 11.6% after its German parent Robert Bosch GmbH made an open offer to buy a 20% stake in the company at Rs4,000 per share or Rs25.64bn. Patni (6.2%), Crompton Greaves (3.3%) and Kotak Bank (3.2%) were the other notable gainers.
Deccan Aviation tumbled 5% after the low-cost carrier posted a loss in its third quarter. Loss for the three months ended March 31 reached Rs2.13bn, the company said in a statement without giving year-ago numbers. Total sales rose 66% to Rs4.57bn, while net sales were Rs4.38bn.
Market Volumes:
The turnover on NSE was down by 30% to Rs82.22bn. BSE Oil & Gas index was the major loser and lost 3.04%. BSE Auto index (down 0.69%), BSE Bank index (down 2.34%) and BSE PSU index (down 1.22%) were among the other major losers.
Volume Toppers:
IFCI, TTML, Cipla, Nagarjuna Fertilizers, IDFC, Orbit Corp, R Com, Idea, RPL, RNRL, SAIL, IREAL, IDBI, Tele Data Informatics, FSL, Bharti Airtel, Satyam Comp, RIL, Bank of India, HCC.
Lower Circuit:
Deccan Aviation, GHCL, GTC Inds, Tele Data and Unitech.
Results Today:
Alps Industries, APIL, Amtek India, Amtek Auto, Andhra Bank, BEL, Bharti Shipyard, CESC, GHCL, GBN, HLL, ICICI Bank, JSW Steel, Jain Irrigation, Mphasis BFL and Vijaya Bank.
Delivery Delight:
Arvind Mills, Asian Electronics, Bata India, Crompton Greaves, DCHL, Gammon India, HCL Infosystems and Infotech Enterprises.
Abnormal Delivery:
Raymond, Balrampur Chini, Cadila Healthcare, Wockhardt, Tata Tea, Hindalco and Grasim.
Stock Futures with Largest Increases in OI:
Cipla, Chennai Petro, J&K Bank, Crompton Greaves, Indian Bank, Bharti Airtel, Bongaigaon Refinery, ICICI Bank and Aban Offshore.
Stock Futures with Largest Decreases in OI:
BILT, ACC, IOC, Corp Bank, Zee, Divi’s Labs, India Cements, STAR, Cummins and Tata Steel.
Results Corner:
Ranbaxy Q1 group profit at Rs1.28bn (up 80%), net sales at Rs15.54bn (up 23%)
GlaxoSmithKline Consumer Q1 profit at Rs423mn (up 23%), revenue at Rs3.4bn (up 20%)
Cipla Q4 net income (down 34%) at Rs1.26bn and total sales fell 57%
Brokers Recommendations:
RIL – Outperformer from Man Financial with target of Rs1707
Wipro – Buy from ABN Amro with target of Rs690
Long Term investment:
Crompton Greaves
Major News
Inflation rate unchanged at 6.09% in week ended April 14 against expectation of 6.10%
Essar Propack plans to spend additional $14mn to expand in the US
JSW Steel may build US Steel Mill
Bharti plans to start Direct-to-Home TV Broadcast this year
SBI says ' No Decision' on share sale
Petron Engineering gets Rs45.5mn order